The world’s biggest reinsurers have reported a hardening in the market in the second quarter and say they expect the trend to continue.

Munich Re returned to profit in the quarter to June 30 after making a loss in the previous quarter due to catastrophe claims.

Chairman Nikolaus von Bomhard says the group is aiming to report a profit for 2011 although it has upgraded its loss from the February Christchurch earthquake to €1 billion ($1.36 billion) from €261 million ($357 million).

He described the second-quarter profit of €738 million ($1 billion) as a “respectable result”, while noting the group made an operating loss of €437 million ($597.6 million) for the first six months due to large catastrophe losses in the first quarter.

Dr von Bomhard says the reinsurance market has started to harden, with price increases in some segments, particularly catastrophe business.

Munich Re’s gross written premium from reinsurance rose 14% to €6.4 billion ($8.7 billion) in the quarter and its combined ratio from reinsurance was 99.6% for the quarter and 133.1% for the half.

It expects natural catastrophe claims, pre-tax and post-retrocession of €3.4 billion ($4.6 billion).

The group’s gross written premium for the quarter rose 9% to €11.9 billion ($16.2 billion).

Swiss Re recorded higher prices and volume from reinsurance in the quarter on increased demand for natural catastrophe cover from New Zealand, Australia and the US.

Chairman Walter Kielholz and CEO Stefan Lippe say the reinsurance market has started to turn “and we expect further improvements over the next six to 18 months”.

The Zurich-based group recorded a net profit of $US960 million ($919.4 million), up 18%. Premiums earned rose 10% to $US5.1 billion ($4.8 billion).

Operating income from property and casualty more than doubled from $US455 million ($435.7 million) to $US993 million ($951 million) and income from the life and health division rose by 13% to $US161 million ($154.2 million).

Mr Kielholz and Dr Lippe say they expect more potential in emerging markets such as China, Brazil and Vietnam, noting that China is already the group’s third-largest market in terms of gross written premium.

But they noted financial market volatility following sovereign debt issues in Europe “continues to be a concern”.